Big snowstorms didn’t slow U.S. auto sales in January

by
Tom Krisher And Dee-Ann Durbin, The Associated Press | February 2, 2016

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Automakers reported U.S. sales that topped analysts’ estimates for January, showing that even thigh-deep snow couldn’t thwart Americans’ demand for new trucks and SUVs.

General Motors, Fiat Chrysler and Nissan reported surprise sales gains instead of the predicted declines, while drops at Ford, Toyota and Honda were narrower than projected.

The uneven nature of January’s results — some up, some down — reinforced investors’ concerns that sales may be near a peak and automakers’ shares fell. Industry executives and analysts took a more positive read, bolstering their forecasts that 2016 will be a record year, a bright spot amid an unsettled U.S. economic outlook and dour markets in recent months.

“If you have a job, you’ll spend money,” said Kevin Tynan, auto industry analyst for Bloomberg Intelligence. “While stock market volatility makes headlines, it’s not as much a factor when it comes to taking on a new car payment as employment and it’s still strong.”

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After 2015’s record annual sales of 17.5 million cars and light trucks, analysts in a Bloomberg survey estimated this year’s U.S. total will reach 17.8 million. The industry began 2016 on solid ground, with cheap gasoline and low interest rates boosting demand for SUVs and pickups.

January “supports our forecast that we’ll top 18 million in total annual sales for the first time,” said Eric Lyman, vice president of industry insights at pricing information provider TrueCar Inc. He attributes the variation in automakers’ results to consumers’ sensitivity to dealmaking. “There’s always an ebb and flow in the marketplace,” he said.

GM predicted Tuesday that the industry annualized selling rate for January would be 17.5 million, more than analysts’ average estimate of 17.2 million and well above the 16.7 million of January 2015, which included two extra sales days. Fiat Chrysler projected a 17.5 million rate, including medium and heavy-duty trucks, which typically account for at least 200,000.

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Analysts had predicted January sales declines for all major U.S. and Asia automakers. The East Coast was hit with a blizzard the weekend of Jan. 23-24 that dumped more than two feet (61 centimeters) of snow on New York and Washington, bringing the region to a standstill. Even so, most makers reported better-than-predicted results for the month.

GM total sales rose 0.5 per cent, beating the average estimate for a 0.9 per cent decline. Its retail sales rose 9 percent with sales of the Chevrolet Silverado increasing 4.9 per cent. It continued to cut back on low-margin sales to rental-car companies.

Fiat Chrysler deliveries rose 6.9 per cent, instead of the 0.1 percent drop analysts projected. Its truck sales rose 19 per cent, while cars dropped 24 per cent. The Michigan-based unit had its best January in nine years and extended its streak of U.S. sales gains to 70 months, bolstered by a 15 per cent jump in sales of Jeeps.

Nissan reported a 1.6 percent increase as the buying habits of its customers changed amid low gasoline prices. Nissan’s car dropped 6.7 per cent, including a 29 per cent drop for the all-electric Leaf. Truck sales for the brand climbed 18 per cent, aided by a surge for the Murano SUV.

Ford‘s F-Series pickup line fell 5.2 per cent as the automaker said it cut incentives on its best-selling model by US$500 over last year. Ford’s SUV sales rose 4.1 per cent, led by a 26 per cent gain in deliveries of the freshly redesigned Edge.

Toyota reported a 4.7 per cent drop, compared with an average estimate of 4.8 per cent, in a tough month for its car sales. Every one of its Lexus luxury cars fell by at least 10 per cent, including a 17 per cent drop for the unit’s top-selling ES sedan.

Honda’s decline included a 14 per cent hit for Acura. Sales for its main brand were little changed, as deliveries of the redesigned Civic small car surged 43 per cent.

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“Household balance sheets are strong and the labor market continues to improve,” Mustafa Mohatarem, GM’s chief economist, said in a statement.

“January is typically one of the slowest months for the industry, especially following holiday and year-end sales events,” TrueCar’s Lyman said in a statement. “Severe winter weather isn’t ideal for car shopping, but we see signs of strength heading into 2016.”

Investors now also have their eyes on the used vehicle market as more than 3 million autos will reach the end of their leases this year, a 35 per cent jump from 2015, according to the NADA Used Car Guide, which uses data from J.D. Power’s Power Information Network.

The increase in supply may reduce prices in the used market, pinching new-vehicle sales. To prepare, many brands and dealers are stepping up their certified pre-owned vehicle programs, which sold a record 2.55 million vehicles in 2015.